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Earnings: Citigroup said it lost $18.3 billion in the fourth quarter, its largest quarterly loss ever, as it took a $22 billion charge related to the new tax law. Without the writedown, Citi would have made $1.28 per share, beating earnings estimates. Revenue rose to $17.26 billion from $17.01 billion a year earlier.
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Opposite tracks: JPMorgan Chase and Wells Fargo reported wildly different effects from the tax reform law in their fourth-quarter results Friday and they will be traveling down opposite paths going forward, the Heard on the Street column says. Despite a $2.4 billion write-down in the quarter, JPM’s earnings report demonstrates the bank’s “resilience,” while Wells, which reported a $3.4 billion tax benefit, shows its “continued befuddlement.”
“It isn’t hard to look past these one-off items to underlying business trends, which were mostly positive at JPMorgan but not at Wells,” the column said. “The combination of bad past practices and bad past decisions are weighing down Wells Fargo. Investors feeling bullish on the economy and rates have plenty of other banks to bet on, JPMorgan being among the strongest.” Wall Street Journal, here, here and here, New York Times, American Banker
Does JPM chief Jamie Dimon have aspirations beyond the bank? Vanity Fair says “Jamie Dimon’s perfect 2020 candidate sounds a lot like Jamie Dimon. The Democratic Party has a fever and the only prescription is more Dimon.”
Wall Street Journal
No autographs, please: Visa is joining the three other major card networks in no longer requiring consumers to sign for debit and credit-card purchases at the point of sale. The change takes effect in April. Mastercard, American Express and Discover had previously announced similar changes. “The companies say improved security features, in particular the chips that in recent years have been embedded in most Americans’ debit and credit cards, outweigh the security provided by signatures,” the paper says.
Not gonna take it: South Korea’s government is facing a “fierce public backlash” following its attempts to tighten control over cryptocurrency trading. Nearly 200,000 people signed a petition on the presidential office’s official website protesting the government’s actions, enough to force the government to respond. On Monday, the government delivered what the paper describes as its “strongest statement to date” about the dangers of trading bitcoin: “Cryptocurrency is not a legally recognized currency,” the statement said.
Regulatory breakthrough: A recent test demonstrates the viability of automatically incorporating regulations into companies’ policies, a development, the paper says, that “would allow businesses to more quickly and more accurately conform to regulatory changes, let them better deploy their human compliance personnel and give regulators immediate visibility into companies’ compliance efforts.”
Making regulations “machine-executable” reduces “the amount of human oversight needed to interpret and implement rules” and “heralds a future far different from the one that exists now, where regulators issue rules, companies take months to figure out what they mean, then more months to configure their systems to conform to the new rules.”
Tipping point: Citigroup has become the first big Wall Street bank to disclose internal data on gender pay. The disclosure will cover employees in the U.S., U.K. and Germany and adjust for factors including job function, level and geography. The paper says the bank was bowing to pressure from Arjuna Capital, an activist shareholder that demanded more transparency on pay differences between men and women at the largest American financial institutions. Natasha Lamb, managing partner at Arjuna, said Citi’s move was “a tipping point” for Wall Street banks.
Alleged: Nine big banks — Bank of America, Deutsche Bank, HSBC and the six largest in Canada — have been sued for allegedly manipulating the Canadian Dealer Offered Rate. The suit was brought by the Fire and Police Pension Association of Colorado, which says the banks colluded over a seven-year period ending in 2014 to fix the rate in order to boost their profits.
Wider horizon: Victory Park Capital, a Chicago-based investment firm that has been a “vital” source of debt capital to online subprime lenders such as Avant, Elevate and LendUp, is looking to expand outside the U.S. “For us, I see a worldwide opportunity,” senior partner and co-founder Brendan Carroll told the paper. “I think the U.S. is a massive, massive market, but I definitely think opportunities exist outside the U.S.”
“Citigroup is stepping into a leadership role on the gender pay gap that we have not seen from any of its US financial peers.” — Natasha Lamb, managing partner at Arjuna, which has put pressure on large banks to release their pay policies.